Correlation Between Penn National and QURATE RETAIL

Can any of the company-specific risk be diversified away by investing in both Penn National and QURATE RETAIL at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Penn National and QURATE RETAIL into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Penn National Gaming and QURATE RETAIL INC, you can compare the effects of market volatilities on Penn National and QURATE RETAIL and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Penn National with a short position of QURATE RETAIL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Penn National and QURATE RETAIL.

Diversification Opportunities for Penn National and QURATE RETAIL

-0.35

Correlation Coefficient

Penn National  QURATE RETAIL

Very good diversification

The 3 months correlation between Penn and QURATE is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Penn National Gaming and QURATE RETAIL INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on QURATE RETAIL INC and Penn National is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Penn National Gaming are associated (or correlated) with QURATE RETAIL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of QURATE RETAIL INC has no effect on the direction of Penn National i.e., Penn National and QURATE RETAIL go up and down completely randomly.

Pair Corralation between Penn National and QURATE RETAIL

Assuming the 90 days horizon Penn National Gaming is expected to under-perform the QURATE RETAIL. But the stock apears to be less risky and, when comparing its historical volatility, Penn National Gaming is 10.06 times less risky than QURATE RETAIL. The stock trades about -0.04 of its potential returns per unit of risk. The QURATE RETAIL INC is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  264.00  in QURATE RETAIL INC on December 20, 2024 and sell it today you would earn a total of  226.00  from holding QURATE RETAIL INC or generate 85.61% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Penn National Gaming  vs.  QURATE RETAIL INC

Penn National Gaming

Risk-Adjusted Performance

Very Weak

Over the last 90 days Penn National Gaming has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

QURATE RETAIL INC

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in QURATE RETAIL INC are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, QURATE RETAIL reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Penn National and QURATE RETAIL

The main advantage of trading using opposite Penn National and QURATE RETAIL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Penn National position performs unexpectedly, QURATE RETAIL can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in QURATE RETAIL will offset losses from the drop in QURATE RETAIL's long position.

The idea behind Penn National Gaming and QURATE RETAIL INC pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.